Kazakhstan's Government Examines Crucial Points of Forthcoming Tax Revision
Tax Overhaul in Kazakhstan: A Closer Look
Kazakhstan is currently undergoing a major tax reform, focusing on changes to the Value-Added Tax (VAT), corporate income tax rates, and special provisions for agriculture and social sectors. Here's a breakdown of the proposed changes:
Changing VAT Landscape
The standard VAT rate is set to rise from 12% to 16%, as part of an effort to reduce the government's dependency on oil revenues and allocate additional funds to priority projects. To support certain industries and key items, a new 10% VAT rate will be introduced for medical services, with potential expansions planned for 2026 and 2027. Additionally, VAT exemptions will be granted for book publishing, specific medicines, and socially significant food items. The mandatory VAT registration threshold has been raised from 15 million to 40 million tenge.
Supporting Agriculture and Social Sectors
Agricultural producers will see their tax burden reduced, with VAT offsets increasing from 70% to 80%. This measure aims to bolster the agricultural sector's competitiveness. Furthermore, a reduced 10% VAT rate is being discussed for the healthcare sector, as well as other industries yet to be determined.
Adjusting Corporate Income Tax (CIT)
Differentiated CIT rates are proposed based on specific sectors: banks, gambling entities, and financial leasing services will face a 25% CIT rate; financial leasing services will have a 10% CIT rate; education and medical goods production companies will initially pay a 5% CIT rate in 2026, rising to 10% in 2027.
Impact on Annual Tax Revenues
These reforms are part of Kazakhstan's broader economic modernization initiative. While supporters argue they will enhance tax fairness and efficiency, potentially boosting tax revenues, critics caution about increased pressure on businesses and potential inflation, which could negatively affect revenues if not properly managed.
Current Status and Future Prospects
The new Tax Code has been approved by the lower house of parliament (Mazhilis), but is yet to pass through the Senate and receive the President's approval. Given the controversy surrounding these reforms, President Kassym-Jomart Tokayev may consider revisions or delays before signing the legislation into law.
Excise Tax on Fuels
In addition to VAT and CIT reforms, Kazakhstan has also introduced changes to the calculation of excise taxes on fuels in response to fluctuating fuel prices, as outlined in Governmental Resolution No. 280.
In essence, these reforms seek to modernize Kazakhstan's tax system but face challenges in balancing economic growth with social and political considerations.
- The tax reform in Kazakhstan, being a part of its economic modernization initiative, includes changes not only in Value-Added Tax (VAT) but also in corporate income tax rates, which will impact various business sectors like banks, gambling entities, financial leasing services, education, and medical goods production companies.
- The proposed tax reform in Kazakhstan, with changes to VAT, corporate income tax (CIT), and excise taxes, is set to have implications not only within the Kazakhstani economy but also in the broader context of general-news, politics, and business, given its potential impact on revenue and its balancing act between economic growth and social and political considerations.
